The story is set in Seville, Spain, c. 1830, and concerns the eponymous Carmen, a beautiful Gypsy with a fiery temper. Free with her love, she woos the corporal Don José, an inexperienced soldier. Their relationship leads to his rejection of his former love, mutiny against his superior, and joining a gang of smugglers. His jealousy when she turns from him to the bullfighter Escamillo leads him to murder Carmen.

The opera premiered at the Opéra-Comique of Paris on 3 March 1875, but its opening run was denounced by the majority of critics. It was almost withdrawn after its fourth or fifth performance, and although this was avoided, ultimately having 48 performances in its first run, it did little to bolster sagging receipts at the Opéra-Comique. Near the end of this run, the theatre was giving tickets away in order to stimulate attendance. Bizet died of a heart attack, aged 36, on 3 June 1875, never knowing how popular Carmen would become. In October 1875 it was produced in Vienna, to critical and popular success, which began its path to worldwide popularity. It was not staged again at the Opéra Comique until 1883.

Since the 1880s it has been one of the world's most performed operas and a staple of the operatic repertoire. Carmen appears as number four on Opera America's list of the 20 most-performed operas in North America.

Bizet's final opera not only transformed the opéra comique genre that had been static for half a century, it virtually killed it. Within a few years, the traditional distinction between opera (serious, heroic and declamatory) and opéra comique (light-hearted, bourgeois and conversational with spoken dialogue) disappeared. Moreover, Carmen nourished a movement that was to win both celebrity and notoriety first in Italy and then elsewhere: the cult of realism known as verismo.